Deutsche Bank National Trust Company v. Mendonza

• Court: Hawaii Intermediate Court of Appeals
• Decided: May 22, 2026
• Docket: CAAP-24-0000566
• Status: Published

Opinion

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 22-MAY-2026 08:35 AM Dkt. 68 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

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DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR THE BCAP LLC TRUST 2007-AA4 MORTGAGE PASS-THROUGH CERTIFICATES SERIES, 2007-AA4, Plaintiff-Appellee, v. TAMARA RUTH KALEIMOMI MENDONZA; EWA VILLAGES OWNERS ASSOCIATION; CITY AND COUNTY OF HONOLULU; SAMUEL L. GOMES A/K/A SAMUEL LELEKU GOMES; DAYNE PANAKONAU#E KAHAU, Defendants-Appellees, and KMT INVESTMENT LLC, Defendant-Appellant, and JOHN and MARY DOES 1-20; DOE PARTNERSHIPS, CORPORATIONS or OTHER ENTITIES 3-20, Defendants

NO. CAAP-XX-XXXXXXX

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CASE NO. 1CC151000836)

MAY 22, 2026

LEONARD, PRESIDING JUDGE, HIRAOKA AND MCCULLEN, JJ.

OPINION OF THE COURT BY HIRAOKA, J.

Deutsche Bank National Trust Company nonjudicially

foreclosed a residential mortgage and purchased the property at

auction, but did not pay assessments to the #Ewa Villages Owners FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Association. Five years later, Deutsche Bank sued to invalidate

its foreclosure, reinstate the mortgage, and judicially foreclose

the mortgage. The Association then nonjudicially foreclosed its

lien for unpaid assessments. KMT Investment LLC purchased the

property at auction. Deutsche Bank added KMT to its lawsuit and

sought to invalidate the Association's foreclosure, too. The

Circuit Court of the First Circuit rescinded both foreclosures and entered a Hawai#i Rules of Civil Procedure Rule 54(b)-

certified Amended Judgment for Deutsche Bank on those claims.1

KMT appeals.

We hold that Deutsche Bank's nonjudicial foreclosure

was valid; even if it had been voidable, the mortgagor was the

only person who could have voided it and the deadline to do so

has passed. We also hold that Deutsche Bank did not sustain its

burden, as summary judgment movant, to show the Association's

foreclosure was invalid or that the Association would not be able

to prove its foreclosure was valid. We vacate the Amended

Judgment and remand for further proceedings.

I. BACKGROUND

These facts are uncontroverted: Tamara Mendonza signed

a promissory Note and a Mortgage on Property in #Ewa Villages.

The Property was registered in Land Court. The Mortgage was

recorded. An assignment of the Mortgage to Deutsche Bank was

also recorded.

1 The Honorable James H. Ashford presided.

2 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Mendonza defaulted on the Note. Deutsche Bank

nonjudicially foreclosed the Mortgage. It purchased the Property

at the foreclosure auction for $320,000. It recorded a

Mortgagee's Affidavit of Foreclosure Under Power of Sale in

January 2010. A quitclaim deed transferring title to Deutsche

Bank was recorded in June 2010, and a transfer certificate of

title (TCT)2 was issued to Deutsche Bank.

Deutsche Bank stopped paying assessments to the

Association. The Association recorded a Notice of Default and

Lien against the Property in March 2014.

Deutsche Bank sued Mendonza, the Association, and

others in April 2015. The complaint alleged that the recorded

assignment of the Mortgage contained a typographical error in the

name of the trust for which Deutsche Bank was trustee. It prayed

for a judgment declaring that Deutsche Bank's nonjudicial

foreclosure was valid or, if invalid, that it was entitled to

judicially foreclose the Mortgage. Mendonza's default was

entered in November 2015.

In August 2016 the Association recorded a Notice of

Default and Intent to Foreclose. The Association nonjudicially

foreclosed its lien for unpaid assessments. KMT was the winning

bidder for $81,000. The Association recorded an Association's Affidavit of Foreclosure Sale Under Power of Sale in April 2017.

2 The initial certificate of title entered on the Land Court's decree of registration is the "original certificate of title." Hawaii Revised Statutes (HRS) § 501-75 (2018). A certificate of title entered after registered property is conveyed is a "new certificate of title." HRS § 501-108(a)(1) (2018). The Rules of the Land Court refer to a new certificate of title as a "transfer certificate of title." See Rules of the Land Court Rules 14, 26 (1989); Wells Fargo Bank, N.A. v. Omiya, 142 Hawai #i 439, 443 n.4, 420 P.3d 370, 374 n.4 (2018).

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A quitclaim deed transferring title to the Property to KMT was

also recorded in April 2017. A TCT was issued to KMT.

In September 2022 Deutsche Bank amended its complaint

to name KMT as a defendant. It again alleged the typographical

error. It also alleged that "title companies generally stopped

issuing title insurance for real properties that were acquired in

Hawaii via a non-judicial foreclosure sale" after the supreme

court decided Kondaur Capital Corp. v. Matsuyoshi, 136 Hawai#i

227, 361 P.3d 454 (2015). It alleged "the Property is now

unmarketable[.]"

Despite alleging the Property was unmarketable,

Deutsche Bank alleged the $81,000 price KMT paid for the Property

"is inequitably low absent a Court order that [Deutsche Bank]'s

Mortgage continues to encumber the Property[.]" Relevant here,

the amended complaint sought: (1) to ratify Deutsche Bank's

nonjudicial foreclosure, invalidate the Association's nonjudicial

foreclosure, and expunge KMT's ownership of the Property; or

(2) if Deutsche Bank's nonjudicial foreclosure was declared

invalid, judicial foreclosure of the Mortgage and a declaration

that KMT's interest in the Property was subject to the Mortgage.

Deutsche Bank moved for summary judgment. During the

hearing, the circuit court stated "there's no genuine issue of

material fact and [the court] will grant [Deutsche Bank]'s motion

for summary judgment as to rescinding both [Deutsche Bank]'s 2008

and the [A]ssociation's 2017 nonjudicial foreclosure sales." The

court declined to rule on Deutsche Bank's request for judicial

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foreclosure. A judgment was entered on June 21, 2024.3 KMT

moved for reconsideration. The motion was denied.

KMT appealed. We temporarily remanded for entry of an

appealable judgment. The Amended Judgment was entered on

March 3, 2026.

II. POINTS OF ERROR

KMT's opening brief states three points of error, which

we have reordered: (1) the circuit court erred by concluding that

good cause existed to rescind Deutsche Bank's nonjudicial

foreclosure; (2) the circuit court erred by invalidating KMT's

ownership of the Property; and (3) the circuit court erred by

denying KMT's motion for reconsideration.

III. STANDARD OF REVIEW

We review a grant of summary judgment de novo. Ralston

v. Yim, 129 Hawai#i 46, 55, 292 P.3d 1276, 1285 (2013). Summary

judgment is appropriate if the evidence shows there is no genuine

issue as to any material fact and the moving party is entitled to

judgment as a matter of law. Id. A fact is material if proof of

that fact would establish or refute an essential element of a

party's cause of action or defense. Id. at 55–56, 292 P.3d at

1285–86. The evidence must be viewed in the light most favorable

to the non-moving party. Id. at 56, 292 P.3d at 1286.

3 The Honorable John M. Tonaki presided.

5 FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

IV. DISCUSSION

A. Deutsche Bank's nonjudicial foreclosure was valid; even if it had been invalid, Mendonza was the only person who could have voided it.

(1) Deutsche Bank's motion for summary judgment sought

"an order, judgment, and judicial declaration:"

5. Ratifying and validating: (a) [Deutsche Bank]'s Notice of Mortgagee's Non-Judicial Foreclosure Under Power of Sale recorded on August 28, 2008, in the Land Court as Document No. 3784312 on Transfer Certificate of Title No. 541,566; (b) [Deutsche Bank]'s non-judicial foreclosure sale of the Property held on January 7, 2010; (c) the Mortgagee’s Affidavit of Foreclosure Under Power of Sale recorded on January 25, 2010, in the Land Court as Document No. 3934762 on Transfer Certificate of Title No. 541,566; [and] (d) the Quitclaim Deed recorded on June 29, 2010, in the Land Court as Document No. 3974756 on Transfer Certificate of Title No. 541,566, which resulted in the issuance of Transfer Certificate of Title No. 986,900 pursuant to which the Property was conveyed to [Deutsche Bank.]

The only issue raised by Deutsche Bank that might have

invalidated its nonjudicial foreclosure was that its assignment

of the Mortgage:

contains a typographical error in that assignee is listed as DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR BCAP TRUST LLC 2007-AAH; whereas, the correct assignee and real party in interest is Plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR THE BCAP LLC TRUST 2007-AA4 MORTGAGE PASS-THROUGH CERTIFICATES SERIES, 2007-AA4.

(Emphasis in original.)

The Assignment of Mortgage and Note actually identified

the assignee as "Deutsche Bank National Trust Company as Trustee

for BCAP 2007-AAH, a Delaware corporation." The trust document

is not in the record, so we cannot confirm the trust's name. At any rate, a discrepancy in the trust's name is not

material for two reasons. First, Deutsche Bank's affidavit of

foreclosure under power of sale stated it was the holder of the

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Note. The Mortgage followed the Note. Hawaii Revised Statutes

(HRS) § 490:9-203(g) (2008); Uniform Commercial Code § 9-203,

cmt. 9 (2010) ("Subsection (g) codifies the common-law rule that

a transfer of an obligation secured by a security interest or

other lien on personal or real property also transfers the

security interest or lien."); Bank of Am., N.A. v. Reyes-Toledo,

139 Hawai#i 361, 371 n.17, 390 P.3d 1248, 1258 n.17 (2017)

("Although the security follows the debt, the debt does not

automatically follow the security."). As the holder of the Note,

Deutsche Bank was entitled to foreclose the Mortgage.

Second, a trust is "a fiduciary relationship in which

one person holds a property interest, subject to an equitable

obligation to keep or use that interest for the benefit of

another." Bogert's The Law of Trusts and Trustees § 1 (2025).

"Under Hawai#i law, a trustee holds legal title to property for

the equitable benefit of the trust's beneficiaries, thereby

dividing legal and equitable interest in the trust property."

Coon v. City & County of Honolulu, 98 Hawai#i 233, 260, 47 P.3d

348, 375 (2002).

The Assignment, notice of default, Notice of

Mortgagee's Non-Judicial Foreclosure Under Power of Sale,

Mortgagee's Affidavit of Foreclosure Under Power of Sale, and

Quitclaim Deed correctly identify "Deutsche Bank National Trust

Company as Trustee" as the entity that held the interest in the

Mortgage being foreclosed. Whether Deutsche Bank's fiduciary

duties were owed to BCAP 2007-AAH, or BCAP Trust LLC 2007-AAH, or

BCAP LLC Trust 2007-AA4 Mortgage Pass-through Certificates

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Series, 2007-AA4, or some other trust is immaterial to Deutsche

Bank's right to foreclose the Mortgage. The Assignment, and the

nonjudicial foreclosure of the Mortgage, were valid and binding.

(2) Even if there had been some infirmity rendering

Deutsche Bank's nonjudicial foreclosure voidable, Mendonza was

the only person who could void it. McCullough v. Bank of Am.,

N.A., 156 Hawai#i 446, 455, 575 P.3d 536, 545 (2025) (noting that

if a nonjudicial foreclosure violates a statute or other law

extrinsic to the mortgage itself, the sale is "voidable at the

election of the mortgagor" (emphasis added) (quoting Delapinia v.

Nationstar Mortg. LLC, 150 Hawai#i 91, 101-02, 497 P.3d 106,

116-17 (2021))).

The statute of limitations applicable to a wrongful

foreclosure claim is six years. Id. (citing HRS § 657-1(4)).

Deutsche Bank's motion noted its nonjudicial foreclosure "was

completed over 13 years ago." As a matter of law, Mendonza could

not have voided Deutsche Bank's nonjudicial foreclosure.

(3) There are other reasons Deutsche Bank's

nonjudicial foreclosure should not be voided. A mortgage

foreclosure is an equitable proceeding governed by the rules of

equity. Santiago v. Tanaka, 137 Hawai#i 137, 157, 366 P.3d 612,

632 (2016). Deutsche Bank's motion did not argue that the

Property became unmarketable after Kondaur was decided. But the

circuit court's order (prepared by Deutsche Bank's counsel) found

and concluded:

3. As a result of Hawaii Supreme Court decisions, title insurers generally will not insure a conveyance pursuant to a non-judicial foreclosure action in Hawaii.

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See Kondaur, 136 Haw. 227, 240; see also Hungate v. Law Office of David B. Rosen, 139 Haw. 394 (S. Ct. 2017). 4. As a result, title to the Property acquired via [Deutsche Bank]'s Non-Judicial Foreclosure Sale is now likely unmarketable and uninsurable, and therefore, there is good cause to rescind [Deutsche Bank]'s Non-Judicial Foreclosure Sale.

The record contains no evidence that title insurers

will not insure title obtained through a nonjudicial foreclosure,

or that the Property was unmarketable, and neither Kondaur nor

Hungate v. Law Office of David B. Rosen, 139 Hawai#i 394, 391

P.3d 1 (2017), abrogated by, State ex rel. Shikada v.

Bristol-Myers Squibb Co., 152 Hawai#i 418, 526 P.3d 395 (2023),

support that proposition.

Even if that were the case, Deutsche Bank decided to

nonjudicially foreclose the Mortgage instead of filing for

judicial foreclosure. Voiding the nonjudicial foreclosure and

reinstating the Mortgage would cause Mendonza to become liable

for almost sixteen years of additional principal and interest due

on the Note. It would be manifestly inequitable for Mendonza to

bear the consequences of Deutsche Bank's strategic decision.

We hold that the circuit court erred by ordering

rescission of Deutsche Bank's nonjudicial foreclosure under the

circumstances of this case. A summary judgment declaring the

nonjudicial foreclosure valid should have been entered.

B. Deutsche Bank did not sustain its burden to show the Association's nonjudicial foreclosure should be voided.

Deutsche Bank's motion for summary judgment argued that

the Association's nonjudicial foreclosure should be voided

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because "the sale price of the Property to KMT ($81,000.00) is

unconscionably low and fails to meet the fair and reasonable

standard[.]"

A nonjudicial foreclosure must be executed "in a manner

that is fair, reasonably diligent, and in good faith, and to

demonstrate that an adequate price was procured for the

property." Kondaur, 136 Hawai#i at 240, 361 P.3d at 467.

Deutsche Bank, as summary judgment movant, had to present

evidence that the Association's nonjudicial foreclosure was not

fair, the Association was not reasonably diligent or acted in bad

faith, and KMT's winning bid price was inadequate; or show that

the Association could not satisfy its burden of proof at trial.

Ralston, 129 Hawai#i at 60, 292 P.3d at 1290.

Deutsche Bank's motion presented no evidence that the

Association did not conduct its nonjudicial foreclosure in a

fair, reasonably diligent, and good faith manner. Deutsche Bank

argued only that KMT did not pay an adequate price because

Deutsche Bank had "purchased the Property [(in 2010)] with a

credit bid of $320,000.00 and the current tax assessed value of

the Property is $868,700.00."

The Association countered that the Property's tax-

assessed value in 2023 was irrelevant to the Property's value

when KMT purchased it in 2017. Deutsche Bank made no other

argument why KMT did not pay an adequate price for the Property —

particularly given its allegation that the Property was

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unmarketable.4 Deutsche Bank failed to meet its burden to show

the Association could not prove KMT's bid amount was adequate.

The circuit court erred by granting summary judgment on Deutsche

Bank's claim to void the Association's nonjudicial foreclosure.

We need not address KMT's arguments that it was a bona

fide purchaser of the Property,5 and that the circuit court erred

by denying its motion for reconsideration.

V. CONCLUSION

The June 21, 2024 Findings of Fact and Conclusions of

Law; Order Granting in Part and Denying in Part Plaintiff's

Motion for Summary Judgment and the March 3, 2026 Amended

Judgment are vacated, and this case is remanded to the circuit

court. On remand, the circuit court should enter an order

granting in part and denying in part Deutsche Bank's January 23,

2024 Motion for Summary Judgment. The order should grant

Deutsche Bank a partial summary judgment against all defendants

on the Second Cause of Action of the September 23, 2022 Amended

Verified Complaint for Declaratory Relief, Equitable Relief, and

4 We express no opinion whether KMT's purchase price was adequate under Kondaur or any other standard; the parties must litigate that issue on remand. 5 A bona fide purchaser is one who acquires an interest in a property for valuable consideration, in good faith, and without notice of another party's adverse interests in the property. By contrast, a non-bona fide purchaser is one who does not pay adequate consideration, takes with knowledge that his transferor acquired title by fraud, or buys registered land with full notice of the fact that it is in litigation between the transferor and a third party. McCullough, 156 Hawai#i at 456, 575 P.3d at 546 (cleaned up).

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Judicial Foreclosure, declaring that Deutsche Bank's nonjudicial

foreclosure of Mendonza's Mortgage was valid, and deny all other

relief requested by the motion.

On the briefs: /s/ Katherine G. Leonard Frederick J. Arensmeyer, Presiding Judge for Defendant-Appellant KMT Investment LLC. /s/ Keith K. Hiraoka Associate Judge Lloyd T. Workman, for Plaintiff-Appellee /s/ Sonja M.P. McCullen Deutsche Bank National Associate Judge Trust Company, as Trustee.